Wazuans how true is this investments movement going on FEP??The reason i ask is the stories and investments opportunities promise they have is Fasnating or fake.They say anyone who would have invested 600K by 2016 would be worth 600million worth of shares as one of the owners founders of FEP bank which is to be opened.
(1).They claim to have started a chain of Hotels already operating,Travel companies,Real estates ,Schools and the company new share holders stake is already a 1Billion Kenya shillings???Guys they have been campaighning hard to Kenyas of diaspora who are their target only.Question how come the idea comes from Nairobi but no too many people buying it?? or that much intrested .How come they are only 1,373 share holders only and the message has gone across the board both at Kenya and now Diaspora.How true is this or is another ponzi s
Kenyans Attend FEP Shares Sales Event in Lowell
Fountain Enterprises Programme (FEP) again this year sold shares of what they envision to be the biggest bank in Kenya, 2016. FEP CEO John Kithaka said they currently have 1,310 shareholders of whom 73 of them invested Kshs 400,000 to Kshs 786,000 for 1 share of Kshs 400,000 that by 2016 will be worth Kshs 600 million. The other 1,237 shareholders he noted invested Kshs 200,000 to Kshs 463,000 for a share that will be worth Kshs 200 million. He also invited more investors to take more shares of Kshs 200,000 that will be worth Kshs 30 million, 2016. The 1,310 shareholders who have injected close to Kshs 1 billion will thus in four years be the primary capital base of the bank and are expected to have Kshs 291.2 billion in capital before the bank lists in Kenya Stock Exchange Market for them to cash their dream. The current share capital of all 45 banks of Kenya as per Central bank and World Bank report 2010 is Kshs 196.25 billion. Thus this bank will be about 1 ½ times bigger than all current 45 banks in the Share Capital.
Any dream can be achieved if we go by Facebook, which 8 years ago started from zero to grow to about $50 billion today, about Kshs 4 trillion, before enlisting in any stock market. Those that have achieved great success have created unique models that have grown their profitability so fast. FaceBook became a system that many quickly demanded and in their search to communicate became the most visited website worldwide. Whereas the unique system of FEP remains a mystery, we can surely say any idea has potential.
To get 73 investors to have a worth of Kshs 600 million wealth each and 1,237 investors have a worth of Kshs 200 million each, the CEO explained the share splint system. The split system is a capitalization system that good ideas are capitalized through injection of new capital with the original member shares increasing with each split of the growing idea. Incase of Facebook started October 2003, the first split came on October 2007 when Microsoft valued and capitalized Facebook with $240 million and acquired 1.6% shares. At that point the implied value of the company became $15 billion and the 98.4% founders share had an implied value of $14.8 billion. Whereas the 1,310 investors can have hope based on Facebook success, they however should also learn from MySpace started 3 months before facebook on August 2003 which was the first model of Internet Social Networking. On July 2005, MySpace was bought by News Corp for $580 million and would become the most visited website in 2006 in the U.S. before Facebook overtook it in 2008. MySpace was sold for $35 million in July 2011 after decline in business revenue.
Imagining that a group of about 2,000 shareholders can have the biggest bank by 2016, 4 years from now is great. However for every reward there is always great risk. MySpace is not a bad system but it was defeated by its competitor. To achieve the biggest bank FEP would have to currently beat the Six biggest banks: KCB, Barclays, Co-operative, Standard, Equity and CFC/Stanbic to take the market of what they do best. The bank created by FEP would have to beat the micro finance leading banks, Equity Bank and Co-operative Bank, that today cater for, Equity Bank 6 million account holders and Co-operative Bank all co-operative societies. The FEP model would have to also be associated with the biggest companies so as to beat the Barclays Bank and Standard Bank that currently supply banking services to this clientele. Off course they would have to forget the Government Market that is currently taken by KCB and National Bank and see devolution as just a change of Council system to County Assembly and the Executive of District/County from a District Commissioner to a Governor. Lastly they would have to beat the Mortgage Loans leaders currently dominated by KCB mortgage arm Savings and Loans, HFCK that Equity bank has Share Capital coming second and CFC/Stanbic third.
In a discussion with Kenyans who wanted to know whether there is risk of money invested as Share Capital, the answer unfortunately was “Yes!” Once the money enters any company as investment it then moves to expenses that could be: Assets expenses, Operational expenses or Revenue generating expenses. The money starts competing for the market share for revenue if the share worth will grow. If a company revenue base declines just like MySpace mentioned above the company share value declines. The only way for any shareholder to make sure they do not lose is to understand the revenue strategy. Companies listed in stock market will release their performance data every 3 months or quarterly so shareholders understand the revenue base. The same should apply for shareholders investing in any system.
Banking business revenue is about loans and the main revenue is interest. The main products are: Micro Finance small loans for Small & Medium Enterprises SME’s; Business loans for large companies operations & production processes and mortgages for property & housing products. Regardless of whether one is a shareholder of a bank, the first instinct that goes through a consumer when looking for a loan is not the bank I have shares but the interest rate. A businessperson cannot take a loan of say 20% to finance business from a bank just because they own bank when a competitor is getting a finance loan of 15%. To generate money to lend one has to also compete in the market of deposits and again regardless of whether one owns a bank consumers will deposit in the bank giving them the highest return.
Whereas business models started based on capitalization through the “The Power of Many” will work well from the production side, the consumers are known to make decisions based on taste, price and on individual bases. A good example when many Kenyans bought Safaricom shares and then lured by a competitor to lower prices they did not say, “I will continue paying Kshs 5 a minute when XYZ Company is Kshs 3 per minute because I have shares for Safaricom.” Successful business models are made to win in the consumption without combining ownership and consumption.
Whichever model FEP maybe using one thing is for sure if they succeed toward having a revenue base that can be valued by others during each split to grow the original Kshs 1 billion to become a Kshs 350 billion Share Capital an average growth of 350 times per shilling invested in 4 years, then a new banking model will have been created for the world to adopt.